Magazine Article | May 31, 2019

How A Partner Scorecard Drives Revenue Growth

Source: Software Executive magazine

By Robert Jurkowski

Software companies need a better way to select the right channel partners at the beginning — partners that have the best potential to drive revenue growth.

All of us appreciate the tremendous value channel partners bring to drive revenue and expand coverage into new or adjacent markets. In many cases, channel partners already have significant customer relationships and domain knowledge they can leverage on our behalf. Economically, it makes a lot of sense to leverage a partner’s salesforce rather than grow your own, organically, at great expense.

If you have an existing channel partner program, how do you decide where to invest your time, based on expected return? If you are building your channel partner program, how do you select the right partners to drive sales and revenue growth for your company? These are important questions as you build and scale your channel partner program. Getting the results that you want starts with selecting, recruiting, engaging, and enabling the right partners.

Unfortunately for most companies, 20 percent of their channel partners are responsible for more than 80 percent of their indirect sales revenue. Many partnerships are opportunistic, or they never get launched beyond the written agreement.

Every partnership that does not provide ROI for your company takes your time and money. You also have opportunity cost when you invest in the wrong partners, because it takes time and resources away from investing in the right ones. What you need is a better way to select the right channel partners at the beginning — partners that have the best potential to drive revenue growth.

SOLUTION: THE PARTNER SCORECARD

With this challenge in mind, I developed the partner scorecard so every company can proactively identify the best partners to work with. The partner scorecard rates every potential partner against a set of criteria that best predicts success for the partnership.

If your company has the capacity to work with 10 partners a year, you want to proactively choose the top 10, based on the development of your partner scorecard. For example, you might choose partners opportunistically, such as when a potential partner approaches you and wants to resell your solutions in EMEA. At first glance, this may seem like an ideal opportunity because you do not have direct sales coverage in EMEA. However, if you sign the agreement and one year later, little or no revenue has been derived from the partnership, you are already invested in a relationship that does not produce an ROI.

The partner scorecard allows you to proactively develop your partner program. Once you develop the partner scorecard, you can map the entire ecosystem of potential partners, score them, and engage the top partners that meet your criteria. If you have an existing partner program in place, you can use the partner scorecard to score all of your existing and potential partners to determine where you want to invest your time. Now you can weed out existing partners that will not deliver revenue and growth for your company.

THE PARTNER SCORECARD — APPLIED

When you attend a conference, chances are you will download software to your smartphone in advance so that you have access to the entire program, speakers, presentations, exhibitors, attendee list, and hotels. The host for the conference may enable you to network with other attendees through this software, take surveys, and provide an interactive program — all on your smartphone.

Recently, I engaged with the owners of a mobile event management software company to help them develop their partner program. They already had an opportunistic but informal partnership with a large-event management software company to provide their mobile solution to their customers. But because this partnership was informal and not perceived as strategic, the leadership at the large-event management software company acquired a competitor, and the partnership ended. We then sought to create a new partner program — but this time we wanted to attract the right partners.

We developed 10 criteria that would predetermine a successful partnership. With every criteria, we scored their capability on a scale of 0 to 10, with 0 designated as “no fit” and 10 designated as a “perfect fit.” Then we mapped their ecosystem of everyone that was in their space — event management software companies, complementary technology partners, and dedicated event management companies. Every potential partner scored anywhere from 0 to 100. We created a scorecard for almost 100 companies and quickly determined which 20 to engage with to drive their channel programs. One company scored 93, another scored 62, and yet another scored 78. By using an objective partner scorecard to rate every partner, it focused their energy on the right partners that drove their revenue growth.

Here are the criteria we used to develop their Partner Scorecard. Every company will use a set of criteria that is unique to their company, offerings, and markets.

  1. Estimate Of Size — based on revenue or number of employees, larger companies provided a bigger footprint with a larger sales team.
  2. Worked With Other Partners/Acquisitions — we were looking for companies that understood how to partner.
  3. Focused On Similar Verticals — our client was focused on specific vertical industries including financial services, pharma, and technology companies (so a similar focus was a plus).
  4. Have 500+ Customers — we were looking for a significant customer base so that the mobile event management solution could be sold to current customers.
  5. Support Modern Integrations — we were looking for companies that would be easy to integrate with and had published APIs.
  6. Competent To Represent Solutions — we were looking for partners that could sell or represent their solutions with similar or greater complexity.
  7. Access To C-Level Champions — the partnership needed to be at the CEO or VP of Business Development level.
  8. No Competitive Offerings — it was important that none of the potential partners offered other competing mobile event apps.
  9. Perceived As A Natural Extension By Customers — we wanted to ensure that their customers would perceive these mobile event apps as an extension to their solution/platform today.
  10. Desire By The Partner To Be Self-Sufficient — we were looking for potential partners that had demonstrated that they wanted to be self-sufficient and represent the solutions to their markets.

One of the keys to developing the partner scorecard is to use readily available information about each company from market research, their website, or other publicly available documents. For instance, you can determine a company’s stance on partnerships by reviewing its company press releases for past partnership announcements, and to learn if they have a dedicated VP of Business Development specifically to drive their partnerships.

When you hear the concept of a Partner Scorecard, one interpretation may be to score their execution against plan. In this instance, we believe it is equally important to proactively select the right partners for this mobile event management software company.

A HIDDEN GEM: ACQUISITION

When we created this Partner Scorecard, every potential partner in their ecosystem was scored. The mobile event management software company engaged the best potential partners immediately. There were also many potential partners that scored low because they did not demonstrate any known competency with mobile event management apps.

As in this example, the event management software industry had started and matured before smartphones were available. With the advent of the smartphone, a totally new and significant extension was added with mobile event apps. One of these companies knew that they had a significant gap and did not offer a set of mobile event apps as part of its platform and scored low with our partner scorecard — they acquired the mobile event management software company.

The partner scorecard does a terrific job determining who you should partner with and who you should avoid. The hidden gem is that it also identifies companies that need what you offer — ones that might be a better fit to acquire you than to partner with you.

ROBERT JURKOWSKI is the founder and managing partner for On Demand Advisors, a global revenue acceleration firm (www.ondemandadvisors.com). His firm has collaborated with 300+ software, cloud, IoT, and services companies to help them implement revenue growth best practices and experience predictable and significant revenue growth.